Amgen, Inc. (AMGN), AstraZeneca plc (ADR) (AZN): What’s the Big Deal About Onyx Pharmaceuticals, Inc. (ONXX) Anyway?

Page 1 of 2

At the end of June, Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) announced that it had rejected an offer from Amgen, Inc. (NASDAQ:AMGN) that valued the company at $120 per share, or about $8.8 billion. Management stated that the offer undervalued the company’s potential, which sent shares even higher. Things have cooled down a bit after no immediate buyer emerged, although shares are still well ahead of where they began the year.

ONXX Chart

ONXX data by YCharts

Amgen, Inc. (NASDAQ:AMGN) has since bumped its offer up to $130 per share, or $9.5 billion, but other big sharks such as AstraZeneca plc (ADR) (NYSE:AZN) are circling. Why is Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) suddenly on Big Pharma’s radar? What’s so great about the company that makes it worth almost $10 billion?

Kyprolis, and those other two

Most of the attention being paid to Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) revolves around its multiple myeloma drug Kyprolis. The indication has had relatively few treatment options in years past, so the Food and Drug Administration granted approval with just mid-stage data. The proteasome inhibitor currently treats patients who have taken at least two prior therapies, but it could be expanded to treat patients after just one prior therapy pending data from an ongoing late-stage trial.

That could be huge, but what would a potential buyer be getting right now? Kyprolis netted sales of $125 million in the first half of 2013. That’s a strong start for limited approval, but it’s far from best-case scenario projections of $2.2 billion per year. While all eyes are on the multiple myeloma drug, any potential buyer would get a decent rising star in Nexavar as well. The drug, partnered with Bayer, treats liver and kidney cancer and generated revenue of $151 million in the first six months of the year. Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) also captures a 20% royalty on Stivarga sales from Bayer, which amounted to $19 million so far this year — pocket lint for Amgen, Inc. (NASDAQ:AMGN) or AstraZeneca plc (ADR) (NYSE:AZN).

The other side of the coin

What investors need to ask is, what’s the motivating factor for Amgen, Inc. (NASDAQ:AMGN) or AstraZeneca plc (ADR) (NYSE:AZN)? Well, Amgen is set to lose exclusivity on several multibillion-dollar drugs, including Aranesp, Epogen, and Neupogen in coming years. Those three alone brought in $5.25 billion for the biotech giant in 2012. I believe there’s enough positive momentum in Amgen’s pipeline and biosimilar program to make up for the loss, but it never hurts to be over-prepared! Buying Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) could be just the thing Amgen, Inc. (NASDAQ:AMGN) needs.

AMGN Chart

AMGN data by YCharts

Meanwhile, AstraZeneca plc (ADR) (NYSE:AZN) has had a rough time dealing with the patent cliff. First-half revenue and EPS are down by double digits compared with the year-ago period thanks to expired patent protection for Seroquel, Atacand, and Crestor. The pipeline has some promise, but it’s not exactly making anyone drool. Acquiring Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) would inject some instant offense to AstraZeneca’s business — and it hasn’t been shy about pulling the trigger. The company purchased Omthera and Pearl Therapeutics earlier this year for a combined $1.5 billion. It would have to pay up considerably more for Onyx, but it could be worth it down the road.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!